Safeway (SWY) overall option implied volatility of 28 is near its 26-week average of 29, according to Track Data, suggesting nondirectional movement into its March 9 analyst meeting.

Nokia (NOK) volatility is near ten-month lows. Nokia April and July put option implied volatility is at 38, below its 26-week average of 44, according to Track Data, suggesting decreasing price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

In the wake of Friday's drastic pullback in the stock market, it looks like at least one trader is banking on more short-term volatility. Bright and early Monday, a spread speculator constructed a long straddle on the PowerShares QQQ Trust (QQQQ), with the trader hoping to capitalize on a substantial price swing over the next several weeks.

Specifically, the trader purchased a block of 1,205 February 56 calls, and simultaneously bought a matching block of 1,205 February 56 puts. QQQQ was hovering right at $55.69 at the time of these transactions, placing both strikes very near the money.

Friday morning, the good folks at JPMorgan Chase (JPM) kicked off a wave of quarterly reports from the banking sector. Next week, we'll hear the latest earnings results from the likes of Citigroup (C), Goldman Sachs (GS), and Wells Fargo (WFC), just to name a few.

Of course, the biggest bank in the nation -- Bank of America (BAC) -- also has a quarterly report on deck. Ahead of next Friday's fourth-quarter release, one speculator opted to construct a high-volatility options strategy on BAC.

Deere (DE) is recently up 6% after the U.S. lowered its outlook for corn and wheat production. Call option volume of 21K contracts compares to put volume of 19K contracts. October put option implied volatility is at 29, November is at 32, December is at 33, verses its 26-week average of 35, according to Track Data, suggesting decreasing price movement.

CSX Corp. (CSX) is expected to report Q3 EPS on October 13. October put option implied volatility is at 37, January is at 33, near its 26-week average, according to Track Data, suggesting nondirectional price risk.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

Option volume has skyrocketed on Green Mountain Coffee Roasters (GMCR) today, after the Vermont-based coffee company announced that the Securities and Exchange Commission (SEC) has taken an interest in GMCR's revenue recognition practices.

GMCR plunged right out of the gate as traders reacted to the news, with the shares shedding roughly 17% to test round-number support at $30. Option players definitely took notice; within the first two hours of the session, roughly 42,000 calls and 34,000 puts had changed hands on the stock -- outpacing GMCR's predicted daily volume by a massive margin.

Option volume was relatively quiet in Citigroup Inc. (C) on Tuesday, with call and put activity both falling short of the expected daily levels. However, a noteworthy volatility play crossed the tape around midday, with one long-term speculator betting on a significant price swing from the bailed-out bank.

Shortly after noon, a block of 10,000 March 2011 4-strike puts traded at the ask price, suggesting they were purchased, while a matching block of 10,000 March 2011 5-strike calls changed hands at the ask price. Open interest at both strikes swelled overnight by more than 10,000 contracts apiece, confirming these were all freshly opened positions.

Bright and early this morning, Valero Energy (VLO) was singled out for a bullish volatility play. Shortly before 10 a.m., a block of 7,500 contracts traded at the ask price at VLO's September 19 call, indicating they were purchased. Simultaneously, a matching block of 7,500 contracts changed hands on the oil refiner's September 17 put, with this transaction also taking place closer to the ask price. With VLO trading at $18.08 at the time of the trade, both strikes are out of the money.

American Axle & Manufacturing Holdings (AXL) is prepping for its turn in the earnings spotlight. The auto parts issue is slated to confess its second-quarter results ahead of Friday's opening bell, and at least one speculator is looking for a major post-event move from the shares. Bright and early Thursday morning, an ambivalent options trader opened an at-the-money straddle on AXL.

Specifically, the trader simultaneously purchased several matching blocks of August 9 puts and calls. With AXL trading just pennies above $9, both of these options are at the money. By scooping up equal numbers of puts and calls at the same strike, the trader is hoping to capitalize on a drastic move higher or lower from the security.

The S&P 500 Index (SPX) has battled back from its brutal month-long sell-off, but it seems that traders aren't exactly confident in the market's fledgling rebound. According to data from the Chicago Board Options Exchange (CBOE), options players are betting on additional turbulence by purchasing calls on the CBOE Market Volatility Index (VIX).

During the past five sessions, speculators on the exchange have scooped up 142,544 calls on the VIX, along with 126,391 puts. In other words, 1.13 calls have been purchased for every put on the VIX, which is meant to reflect investors' expectations for the SPX's near-term price action.

If you've been watching the market at all during the past month, you probably know that "volatility" is the prevailing theme. With uncertainty on the rise among investors, one option strategist on Thursday initiated a directionally neutral bullish volatility spread on coal concern Peabody Energy (BTU).

Specifically, the trader bought to open a block of 5,000 July 41 calls, and simultaneously bought to open an equivalent number of July 38 puts. BTU was trading just shy of $40 at the time these transactions occurred, placing both options out of the money. In other words, this appears to be the initiation of a long strangle on the stock.

Oil Services Holders Trust (OIH) closed at $98. Crude oil futures are recently down 0.83% to $74.85 according to Bloomberg. OIH volatility increases as uncertainty regarding oil drilling mounts. OIH holdings include BHI, BJS, DO, ESV, GRP, GSF, HAL, SLB, HC, NBR, NE, NOV, RDC, RIG, SII, SLB, TDW and WFT. OIH June put option implied volatility is at 55, July is at 53; above its 26-week average of 36 according to Track Data, suggesting larger price movement.

Stocks with implied volatility above 30-day mean; Apollo Group (APOL), Qualcomm (QCOM), Boston Scientific (BSX) according to IVolatility.

CBOE Volatility Index-VIX at 30.56; 10-day moving average is 32.69, 50-day is 25.74, 200-day moving average is 23.12.

Update is by Stock Specialist Paul Foster of theflyonthewall.com

Last week's ratification of the Durbin Amendment by U.S. lawmakers seemed to put Visa (V) on edge, with the credit card company now facing the prospect of curtailed interchange fees. (Of course, the firm's written statement cited concerns about potential harm to consumers -- a nice touch.)

So, with the forecast looking gloomy on the home front, perhaps it's no surprise that Visa is now trying to woo another major world power. According to Japan's The Nikkei, Visa "will urge the Japanese government to use credit cards for all of its purchases, from stationery items to parts for fighter jets, saying it would save the country a lot of money."

McDonald's (MCD) shares dropped a whopping 1.29% Friday on news that Paris Hilton is setting aside her fast-food habit in exchange for a bikini-ready body. Paris is quoted by Starpulse.com as stating: "I've been really working out. I'm not eating fast food anymore. No more McDonald's. (I'm) getting my bikini body, so I'm about that." This must come as a serious blow to McDonald's.

Well okay, perhaps Paris Hilton's declaration isn't really all that important to McDonald's shareholders, but the truth remains that MCD shares are again showing signs that they have peaked. The question is why? The company's share price is currently hitting strong resistance in the range of $71, and the three key reasons are fierce competition, international monetary exchange instability, and operating expense volatility.

Option traders are pushing up call option prices in the Processed & Packaged Goods industry and are pushing up put option prices in the Packaging & Containers industry.

Any time the volatility skews above 1.00, it is an indication that calls are more expensive than puts. Typically, when calls are more expensive than puts, it means the demand for calls is greater than the demand for puts because investors believe the stock is going to rise in the future and they want to take advantage of that movement by buying calls.

The opposite is also true. Any time a volatility skews below 1.00, it is an indication that puts are more expensive than calls.